The court’s approach to inherited assets will depend on the circumstances of your case. It is therefore very important to receive advice tailored to your specific circumstances.
The Court’s Approach
In order to understand how the court might approach inherited assets in your circumstances, it is important to understand the principles that the court follows.
There is no standard formula that the court will utilise when determining the appropriate division of assets, liabilities and pensions. The court considers all the relevant circumstances, with reference to the principles set out in section 25 of the Matrimonial Causes Act 1973. These are also known as the ‘Section 25 factors’.
The court’s first consideration is the welfare of any minor children involved. The Section 25 Factors are as follows:-
- income, earning capacity, property and other financial resources of the parties (including future income and earning capacity);
- the standard of living enjoyed by the family prior to the breakdown of the marriage;
- the age of the parties and the length of the marriage;
- any physical or mental disabilities of the parties;
- contributions made by the parties;
- the conduct of each of the parties;
- any benefits which may be lost to either of the parties due to the breakdown of the marriage; and
- each party’s financial needs, obligations and responsibilities relevant now or in the foreseeable future.
Case law has provided further guidance on how the court approaches financial settlements. Important cases have determined that the outcome must be fair, considering each party’s needs and the requirement to give each party a fair share of the assets according to the circumstances of the case.
How Received Inheritance Fits into the Section 25 Factors
Inheritance is not specifically referred to within the Section 25 factors.
However, inheritance that has been received by either spouse (or is going to be received imminently) will be considered as a financial resource and potentially, a contribution to the welfare of the family. It cannot be ignored by the court entirely.
It can be argued that inheritance should be ring-fenced and not dealt with as part of the matrimonial assets which are up for division. There is certainly case law to support that inheritance should not be treated the same as assets built up during the marriage and can be considered ‘non-matrimonial’.
However, the strength of this argument will depend on the circumstances of your case. For example, inheritance could have become matrimonialised during the course of the marriage by being mingled with matrimonial assets. This is more likely to be the case in longer marriages.
The family home is usually considered the centre of family life so the fact that this was inherited or inheritance was used to purchase it may not hold much weight with the court.
Most importantly, the question of whether or not inheritance in your circumstances could be considered non-matrimonial could also be irrelevant if all of the assets are needed to meet the parties’ reasonable needs. This is common for the majority of cases due to the inherent difficulty in dividing one household into two.
Potential Inheritance
You might be concerned that you might receive inheritance in the near future or you believe that your ex-partner is going to inherit a large sum when someone in their life (normally their parents) pass away.
There is a duty within negotiations in respect of any financial agreement that both parties should provide full and frank disclosure. A financial consent order could be set aside if it becomes apparent that inheritance was going to be received at the time of an agreement being reached and this was not disclosed.
However, in the majority of cases it is not clear whether someone is actually going to inherit and when. For example, the fact that a party has wealthy parents and may in the future inherit from them is very unlikely to impact any financial settlement or be considered as a financial resource.
Practical Tips
If you are concerned about inheritance you are likely to receive and are not yet separating, you are able to consider a Nuptial Agreement. This could set out any agreement that future inheritance will not be shared. The enforceability of that agreement would depend on whether the other party could meet their reasonable needs, and it would be important to consider and ensure full disclosure of assets has taken place, there is no undue pressure or influence, that the agreement is being entered into voluntarily and with independent legal advice.
Some families will also implement trust structures to ensure that inheritance is protected, again consideration of these, the intention and the nature of the trust is extremely important.
We Can Help
If you are worried about inheritance and how it might impact your divorce, our family law specialists can provide expert advice to ensure the right approach is taken.
You are able to contact us to discuss your options.
